Fees included in the '10 per cent' test for the purpose of derecognition

Work in progress

Fees included in the '10 per cent' test for the purpose of derecognition

The Interpretations Committee received a request to clarify the requirements in IAS 39 and IFRS 9 relating to which fees and costs should be included in the ‘10 per cent’ test for the purpose of derecognition of a financial liability.

The Board considered the Committee's recommendation to propose an amendment to IFRS 9 Financial Instruments as part of the next Annual Improvements Cycle. The proposed amendment would clarify the requirements in the first sentence of paragraph B3.3.6 of IFRS 9. The amendment will say that when carrying out the '10 per cent' test for assessing whether to derecognise a financial liability, an entity includes only fees paid or received between the entity and the lender, including fees paid or received by either the entity or the lender on the other’s behalf.

The Board tentatively decided:

to propose the amendment to IFRS 9 as part of the next Annual Improvements Cycle; and

to propose that an entity apply the amendment only to modifications or exchanges of financial liabilities that occur on or after the beginning of the annual reporting period in which the entity first applies the amendment.